Schizophrenia is a prevalent mental health disorder that creates enormous social, economic, and interpersonal hardships for patients and their families. Although hallucinations and delusions are the most salient symptoms of this disease, language abnormalities are among the most prominent cognitive deficits in schizophrenia. The proposed research will explore the processes and circuits that underlie impaired discourse comprehension in schizophrenia. Discourse comprehension deficits are likely to have important functional implications, but there has been relatively little investigation of real-time discourse processing in schizophrenia, particularly in relation to other impaired cognitive and psycho-social functioning. Previous research in schizophrenia has related cognitive deficits to impairments in the ability to control the maintenance of context representations. We will test the hypothesis that deficits in controlled integration and maintenance of discourse context in schizophrenia will lead to difficulties in discourse comprehension, but will relatively spare processing of meanings of words and sentence structures. To do so we will combine electrophysiological (EEG/ERP) measures of language comprehension with measures of cognitive, social and occupational functioning in schizophrenia. Our approach will allow us to examine whether discourse comprehension deficits in schizophrenia relate to impaired cognitive, social and occupational functioning, and the outcome of this research can be used in the development and assessment of new treatments for this disease.